Walt Disney Co stock today - news and forecast
On Wednesday, August 10th, Disney reported a stronger than expected set of fiscal Q3 2022 earnings results. This sent the Disney stock on an 8% rise in pre-market trading the next day. Like most of Wall Street’s stocks, Disney stock remains down by about 22% year-to-date and by over 35% from the all-time high seen last year.
Disney’s revenue rose 26% year-over-year to $21.5 billion, thanks to the company’s theme parks and resort business making a post-pandemic comeback, effectively rising sales by about 70%. Earnings per share also came in as better than expected at $1.09 versus 96 cents expected, according to a Refinitiv survey of analysts. This represented a 36% rise versus last year.
The company’s streaming division is still making losses, however, and the company has trimmed its 2024 outlook for streaming subscribers by 15 million, with the upper end of guidance now standing at 245 million, down from a previous estimate of 260 million.
What you need to know from the earnings report
- Disney has closed in on Netflix as the leader in the streaming space, with a combined total of over 221M streaming subscribers across Hulu, ESPN+, and Disney+. In comparison, Netflix had 220 million subscribers, according to the most recent tally.
- Hulu had 46.2 million subscribers, ESPN+ had 22.8 million while Disney saw a 31% increase in subscriptions to 152.1 million subscribers as compared to last year.
- Disney+ has trimmed its 2024 outlook for streaming subscribers by 15 million, with the upper end of guidance now standing at 245 million and lower guidance at 215 million subscribers, down from a previous estimate of 260 million and 230 million respectively.
- Disney+, Hulu, and ESPN+ reported a combined loss of $1.1 billion in the fiscal third quarter, thanks to the higher cost of content on the services as the company spent about $8 billion this year.
- Disney’s average revenue per user for Disney+ also decreased by 5% in the quarter in the U.S. and Canada due to more customers taking cheaper multiproduct offerings.
- Disney is also bumping up pricing on Disney+ to $11 per month in the U.S., up from the current $8 per month from December while planning to introduce a new ad-supported tier at $8 per month.
- The company reaffirmed to its investors that they expect Disney+ will become profitable by the end of its fiscal 2024 year.
Disney parks and resort business
- Disney’s biggest wins from the earnings report come from Disney parks, experiences, and products division.
- The division reported a revenue increase of 72% to $7.4 billion during the quarter, thanks to increases in attendance, occupied room nights, and cruise ship sailings.
- The division’s new products; Genie+ and lightning Lane, we pivotal in boosting average per capita ticket revenue during the quarter. The products allowed parkgoers to bypass lines for major attractions and effectively curate the guests’ experiences.
- In-park activities including character meet-and-greets, theatrical performances, and nighttime events at Disneyland were effectively resumed following pandemic-induced slowdowns.
- The company saw an increased Per capita spending at domestic parks by 10% compared to last year. This is also 40% higher than fiscal 2019.
- The company’s US hotels saw a booming occupancy of 90% in the fiscal third quarter.
- The company noted a slow return of international visitors to US parks, who traditionally accounted for 17% to 20% of total guests.
Earnings per share and revenue
- Earnings per share came in as better than expected at $1.09 versus 96 cents expected, according to a Refinitiv survey of analysts. This represented a 36% rise versus last year.
- Revenue also beat forecasts by Refinitiv analysts to close the quarter at $21.5 billion versus the $20.96 billion that was expected.
- As mentioned earlier, this revenue was generated from Disney parks, hotels, and experiences.
Disney’s stock performance history
Disney stock performed relatively well in the second half of 2021, reaching a peak in September. It has since seen a decline of about 35%, partly because of the Q4 FY 2021 earnings release in November. Another mini rally by the stock happened in January and February this year, but the gains vanished shortly after. The company is down 22% this year.
Wall Street’s analysts attribute the stock decline to:
- Macroeconomic factors affecting most global equities,
- The company’s big spending on streaming services against investors’ general consensus to prioritize cash flows amid rising interest rates,
- Disney’s decision to sacrifice its lucrative licensing revenues as it moves back content from third parties to its in-house streaming business,
- The company’s PR crisis, which was raised by Florida’s controversial Parental Rights in Education legislation.
Disney stock price today
As of August 12, The Walt Disney Company (DIS) was traded 121.57$ per share at market close.
Is Disney a good stock to buy?
The Disney stock still looks like a good buy. While the company continues to raise its investment in the streaming service despite making continuous losses. Disney has a much larger value chain, given its theatrical business, theme parks, merchandise, and licensing operations, unlike its streaming competitors, who mostly monetize content investment solely via monthly subscription fees.
The company’s park and hotel division seem to perform stronger than pre-pandemic levels, after soaring 40% in Q3 versus the same period in the pre-pandemic era. This is an indication to its investors that it is capable of generating sizable cash flows for the company and offsetting the large investments being made into streaming services.